Mike van Dulken and Artjom Hatsaturjants at Accendo Markets, commented to clients this morning:
FTSE 100 called to open +5pts at 6845, bouncing back from another flirt with 6800 lows to test Tuesday’s falling highs resistance from 7000 and extend January’s shallow rising channel. Bulls need a break above 6855 2-day support-turned resistance. Bears require a breach of 6840 rising support. Watch levels: Bullish 6855, Bearish 6840
Calls for a slightly higher open come courtesy of positive finish on Wall St, buoyed by strong earnings results from heavyweights IBM and P&G. Asia continued the upwards trend with exception of Japan, where Manufacturing sector PMI fell to breakeven from 52.6 prev.
GBP is strong, trading above 1.30 vs USD for the first time since mid-November. Growing calls to extend the Brexit deadline by as much as 9 months are supporting the Pound, though it’s proving insufficient to hamper the FTSE. Oil prices are being kept under downward pressure following last night’s surprise 6.5m barrel build in API Oil Inventories (market expected a most 42K draw).
In corporate news this morning, Anglo American FY copper production +15% YoY (Q4 +23% YoY, +3% adj. for Minas-Rio stoppage); Diamonds +6% (Q4 +12% YoY, bottom of guidance). Sees lower 2019 diamonds (2019 31-33m carats vs. 2018 35.3m) and lower copper production (2019 630-660kt vs. 2018 668.3kt).
KAZ Minerals FY copper production +14%, top of guidance (Q4 +18.4% YoY, +0.9% QoQ). FY Gold +2.6%, above consensus (Q4 +18.3% YoY, +7% QoQ). FY Silver flat, Q4 +16.9% YoY, -1% QoQ. St James’s Place Q4 net fund inflows +8% YoY, AUM +5.3% (-5% QoQ); 2018 net investment return -£5.48bn vs +£6.2bn in 2017. Tough markets mean fund inflows weakened in last 2 months.
Countryside Properties Q1 in-line; completions +28% (affordable +52%, private -9.6%, rental +66%), order book +78%; adj. op. margin in-line, net debt lower, reservations -10%, open outlets +10%, construction sites +34%, private avg. sale price flat (underlying +1-2%). Premier Oil notes that Talos Energy, operator of Block 7 offshore Mexico, has successfully completed part 1 of Zama appraisal.
Restaurant Grp FY like-for-like sales -2% (total +1%); Positive growth since World Cup, pubs outperformed sector, strong concessions. Leisure improved but dented by weak Dec for cinema. Expect profits in-line with consensus. Wagamama (acquired 24 Dec) traded well over Christmas. 888 CEO Frieberger stands down, to be replaced by COO Pazner.
Daily Mail & Gen Trust backs FY19 guidance; Q1 revs -2% due to B2B -5.5% and insurance-risk and energy information. Underlying growth positive (group +2%, B2B +3%, consumer media +1% [o/w ads +6%, circulation -3%]. Fevertree FY revenue +39% YoY after H2 accelerated; expects FY profits “comfortably” ahead of expectations. Flybe receives first £10m of £20m credit line from Stobart/Virgin Atlantic JV.
In focus today, alongside continued coverage of the World Economic Forum in Davos, will be January flash Eurozone PMI Manufacturing and Services (8.15-9am; mostly forecast better) and the European Central Bank’s (ECB) first policy update (12.45pm) since ending its QE bond-buying stimulus programme. No changes expected from Draghi and Co., but the outlook statement and press conference (1.30pm) will be as important as ever, given the travails in the region and slowing growth.
In contrast, US flash PMI Manufacturing and Services (2.45pm) are expected a shade worse in Jan, albeit from much stronger December readings than Europe. The US CB Leading Index (3pm) may also go negative while the Kansas Fed Manufacturing (4pm) will be of interest after recent mixed signals from Richmond, Philly and New York counterparts. EIA Oil Inventories (4pm) will be watched for its impact on oil prices after last night’s API inventory build.